222

## Balance Sheet \$type=three\$count=6\$author=hide\$comment=hide\$label=hide\$date=hide\$show=home\$s=0

In integral system of accounting, we need not reconciliation of cost and financial accounts. But when we keep our cost and financial accounts separately, we need to reconciliation of cost and financial accounts like reconciliation of bank statements and cash book. With this, we can find the difference in profit or loss which are shown as per cost accounts and financial accounts.

Meaning of Reconciliation of Cost and Financial Accounts

Reconciliation of Cost and Financial Accounts is process to find all the reasons behind disagreement in profit which is calculated as per cost accounts and as per financial accounts. There are lots of items which are shown in the profit and loss account only  when we make it as per financial accounting rules. There are lots of items which are shown in costing profit and loss account only when we calculate profit as per cost accounting.

Suppose, we have taken the profit or loss as per financial accounts, we adjust it as per cost accounts. In the end of adjustments, we see same profit as per cost accounts. If we have taken profit as per cost account, we have to adjust items as per financial accounts. For this purpose, we make reconciliation Statement

1st Case. When we have to adjust items as per financial accounts

 (+) in Rs. (-) in Rs. (A) Profit as per cost accounts XXXXX Add XXXXX 1 Profit on sale of asset XXXXX 2 Dividend received XXXXX 3 Imputed Rent Charges XXXXX 4 Overvaluation of opening stock in cost accounts XXXXX 5 Undervaluation of closing stock in cost accounts XXXXX 6 Excess of material, Labour and overhead cost which is shown as per cost accounts or Overcharge of  Material, Labour and overhead cost as per cost accounts or Over-absorption any expense as per cost accounts XXXXX 7 Interest Received on Investment XXXXX 8 Bank Interest Received XXXXX 9 Under valuation of Closing Stock as per cost accounts XXXXX (B) Less 1 Loss on Sale of Asset XXXXX 2 Dividend Paid XXXXX 3 Financial Expenses a) discount (b) fine and penalties (c) bank interest (d) underwriter's commission (e) Donations (f) interest paid on capital XXXXX 4 Undercharge or under absorption of any expense or loss as per cost account XXXXX 5 over valuation of closing stock as per cost accounts XXXXX Profit as per Financial Accounts (A) - (B) XXXXX
2nd Case. When we have to adjust items as per cost accounts

In this, we take the profit as per financial accounts in the beginning, we add all the times which we have shown in less in above 1st Case. We deduct all the items which we have shown above in Add in 1st Case. After this, balance will be the profit or loss as per cost accounts.

Related : Procedure of Preparing BRS

: 3
1. well said this author.here i learn what's the Meaning of Reconciliation of Cost and Financial Accounts.it helps to identity the reasons for the difference in the profit or loss shown by cost and financial accounts.it ensures the arithmetical accuracy and reliability of cost accounts

2. Thank you very much sir........

In comment, you can give your feedback, reviews, ideas for improving content or ask question relating to written content.

Name

ltr
item
Accounting Education: Reconciliation of Cost and Financial Accounts
Reconciliation of Cost and Financial Accounts
https://1.bp.blogspot.com/-Q06VwgtSFpk/WU7dnoSPl-I/AAAAAAAAVas/2raH4vBL9E8l9tnbyyR9q17Q--qtBO7vgCLcBGAs/s1600/cost%2Baccounting%2Bebook%2Bpromotion.PNG
https://1.bp.blogspot.com/-Q06VwgtSFpk/WU7dnoSPl-I/AAAAAAAAVas/2raH4vBL9E8l9tnbyyR9q17Q--qtBO7vgCLcBGAs/s72-c/cost%2Baccounting%2Bebook%2Bpromotion.PNG
Accounting Education
https://www.svtuition.org/2012/10/reconciliation-of-cost-and-financial.html
https://www.svtuition.org/
https://www.svtuition.org/
https://www.svtuition.org/2012/10/reconciliation-of-cost-and-financial.html
true
2410664366776677676
UTF-8